And now - Baby Bell?

November 4, 1981

In recent years the United States has deregulated several of its most basic industries, including airlines and oil. But what may be the most far-reaching deregulation of all may be in the offing. That is the decontrol of the US telecommunications industry, specifically the American Telephone &amp; Telegraph Company with its more than $125 billion in assets.

Are Americans prepared to accept the higher local phone charges that could result from decontrol, as well as the possibility that, barring close vigilance, AT&amp;T could eventually dominate unregulated communication fields (such as data processing and telecommunications equipment) as it now does telephone transmission itself? To be considered also is that the US has the finest telephone system in the world (a tribute to AT&amp;T). Would service remain as outstanding after deregulation?

The Federal Communications Commission has come out in favor of deregulation. But the crux of the current deregulatory drive is a measure recently passed by the US Senate on a lopsided 90 to 4 vote that would permit ''Ma Bell'' to compete in unregulated telecommunications fields by setting up an independent company - a ''Baby Bell,'' as it were. At the same time, AT&amp;T's subsidization of current local service would in effect come to an end, with local charges rising to reflect actual costs. Currently, long-distance and equipment charges help defray local costs.

The House, which is now taking up the issue at the committee level but has not yet fielded an actual bill, will have to weigh the consequences of decontrol carefully. Certainly there is much to be said for deregu-lation as a spur to competition. Moreover, letting phone bills more honestly reflect actual costs seems sensible economics.

On the other hand, the General Accounting Office, on almost the very eve of the Senate vote, issued a report challenging the contention of the FCC and other proponents of deregulation that Ma Bell could be kept from subsidizing a Baby Bell subsidiary at the expense of competitors. The complicated bookkeeping process for AT&amp;T may alone make such subsidization difficult to prevent.

The administration-backed Senate bill is a good starting point. But the strictest possible legislation would seem to be in order. The House Subcommittee on Telecommunications should draft a bill with four goals in mind: protecting competing users of telecommunications systems; ensuring that there is in fact no possibility of subsidization of a Baby Bell by its parent; guaranteeing untrammeled and uncensored news media access to transmission systems; ensuring that residential phone users are not socked with unreasonable hikes in their local bills.

No final House action is expected until next spring at the earliest. For that reason House lawmakers should avoid being stampeded on the issue.